Retirement is a time to enjoy the rewards of years of hard work, but before you get to that point, there are numerous retirement decisions to consider. From selecting the right financial accounts to understanding the role of Social Security, the choices you make today can significantly impact your future. With so much at stake, having the right retirement guidance can help you feel confident about the path ahead.
Understanding Your Choices
Retirees often face a maze of options when managing their retirement funds. And figuring out how much you’ll need can be complicated. Most financial advisors, including our team here at Hilltop Wealth & Tax Solutions, suggest that you put aside 15% of your gross salary, starting in your 20s.
But, what is the best way to get the most out of what you put away? And what happens if you aren’t able to contribute until you are older? How do you know if you are ready for retirement?
Let's start by looking at the most common approaches to retirement savings.
- IRAs (Individual Retirement Accounts): These accounts provide tax advantages for retirement savings. Traditional IRAs offer tax-deferred growth, while Roth IRAs allow for tax-free withdrawals in retirement. Choosing between these options depends on factors like your current income and future tax expectations.
- 401(k) Plans: If you’ve contributed to a 401(k) during your working years, deciding how to handle these funds is a critical step. You may choose to keep the funds in your current plan, roll them into an IRA, or begin withdrawing based on your financial needs.
- Pension Plans: Although less common than in the past, pensions remain a significant source of income for some retirees. Understanding how and when to claim your pension can make a big difference in your financial security.
- Personal Savings: Beyond retirement accounts, your personal savings—whether in cash, investments, or other assets—play a vital role. These funds are often a safety net for unexpected expenses or additional lifestyle choices.
The Role of Social Security
Social Security provides a foundational source of income for many retirees. Deciding when to claim benefits—as early as age 62—is one of the most important retirement decisions you’ll face. And the longer you wait, the higher your monthly payments can be. Factors such as your health, family longevity, and financial needs all come into play when deciding the best time to file.
That said, planning on living on Social Security alone is not always the best path forward.
Why Guidance Matters
With so many moving parts, crafting a retirement strategy tailored to your goals can feel overwhelming. This is where expert retirement guidance makes a meaningful difference. A trusted advisor can help you evaluate your options, project your income needs, and create a plan that aligns with your lifestyle goals. Whether you’re balancing multiple accounts or considering the timing of withdrawals, having support can simplify even the most complex situations.
An advisor can also help you determine how much you should be saving, particularly if you weren’t able to start contributing in your 20s. Life often brings unexpected financial challenges, and many people find themselves playing catch-up as retirement approaches. A professional can assess your current income, expenses, and savings to recommend a realistic contribution plan that fits your timeline. By identifying opportunities to maximize tax-advantaged accounts like IRAs and 401(k)s, they can help you make up for lost time and build a more secure financial future.
Whether you’re years away from retirement or already preparing to turn in your retirement notice, personalized retirement guidance can help you make informed choices supporting your goals.
Start Planning Today
Retirement is about more than finances—it’s about living the life you’ve envisioned for yourself. By understanding your retirement choices and seeking professional retirement guidance, you can take the first step toward building a plan that feels right for you.
Contact Hilltop Wealth & Tax Solutions today to schedule a consultation. Our experienced team is here to help you navigate your retirement decisions with clarity and confidence.